Government ICT spending heads for plateau

Public sector spending on ICT is set to stabilise over the next five years.

New research from Kable shows that while government is placing the brakes on the spending surge of recent years, the drives for efficiency and radical changes in service provision will open up new areas of growth.

The UK public sector ICT overview and forecast to 2014-15 projects overall spending at £1.66bn in 2009-10, with the prospect of a series of marginal increases to hit £1.72bn in 2014-15. The main internal shifts will involve a contraction of how much central government spends in the field, offset by continued growth for healthcare, while changes in other areas will be marginal.

Collaborative procurement, falling prices, small cuts in outsourcing and a move to extend the life cycles of equipment will reduce spending on hardware and ICT services. But spending in software and telecommunications will increase as organisations try to improve their processes through greater collaboration, standardisation and use of mobile technology.

The report predicts three phases of change for individual organisations, kicked off by a widely anticipated squeeze on public spending. The first will last less than a year and involve public bodies looking for short term cuts.

The second, which will be longer, will focus on looking for sustainable efficiency improvements, and may mean buying ICT which can produce savings by reducing costs and rationalising infrastructure. The third will revolve around the need for radical reforms in delivering services that reduce costs without undermining their quality.

The report also shows that central government has reasserted itself as the largest sector in the market, accounting for £4.04bn of the business in 2009-10 against £3.83bn for local government. However, spending by the former is set to fall sharply to £3.46bn in 2014-15, due largely to a greater use of shared services, while the figure for local government will rise modestly to £4.03bn, with mobile working and ICT outsourcing providing the main areas of growth.

Report author Peter Reed said: "Predictions of apocalyptic spending cuts have made the market jittery, and the next few years are certainly not going to be business as usual. Crises create a sense of urgency, and in the words of Rahm Emanuel (chief of staff to President Obama), 'You never want a serious crisis to go to waste'.

"Whatever the short term pressures on spending, though, public sector bodies only exist to deliver public services. Suppliers which calmly get on with the job of helping them to use ICT to do that are going to see their position strengthened rather than weakened."

This article was originally published at Kable.

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